Saudi Aramco Signs Long-Term LNG Supply Agreement in Louisiana

Saudi Aramco signed a long-term supply deal with Commonwealth LNG, Reuters has reported, citing unnamed sources in the know. The size of the annual shipments will be 1 million tons.

The Cameron, Louisiana, facility will have a nameplate annual capacity of 9.5 million tons of liquefied gas. Originally, the plant was supposed to be up and running by 2027, but the developer said last year it would have to delay the start date to 2031.

The company blamed the temporary ban on new liquefied natural gas capacity that the Biden administration imposed on the industry in its final year, following a report by an environmentalist that claimed LNG is more harmful than coal for the atmosphere. The Trump administration lifted the ban, but not soon enough.

Reports about Aramco’s interest in the Louisiana project, which will use gas from the Eagle Ford shale basin, first emerged last year. The initial amount mentioned in those reports was 2 million tons annually as the Saudi company aims to develop a significant presence in LNG trading, especially in the United States.

For Commonwealth LNG, the Aramco deal is a step closer to hitting its contracted volume target of 8 million tons annually, which it has set as a condition to make the final investment decision on the project. This decision is now expected by the end of the first quarter of this year. The construction of the first phase will cost $11 billion, according to Commonwealth LNG, and generate annual export revenues of some $3.5 billion.

Aramco said last year it aims to build an LNG capacity portfolio of 20 million tons annually to secure a position on the global market for the superchilled fuel in the context of bullish forecasts for global gas demand. As of the date of that announcement, in August last year, Aramco had secured some 4.5 million tons.

By Irina Slav for Oilprice.com

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